Japan has hit the lowest number of deals since 2004. The number of mergers in the first two quarters of 2013 was 997 with a total valuation of US$45.7 billion. That's 47% lower from the numbers Japan had in the first half of 2012.
Last month, Marubeni Corp. cut the size of its acquisition of the American Gavilon Group LLC by US$1 billion from the initial US$3.6 billion it announced in May of last year. Masami Iijima, CEO of Mitsui & Co., the most acquisitive company in Japan in the past five years, said in a statement released in May that it would delay most acquisitions that were significant in size.
Measures to weaken the yen have led the currency to fall from JPY82.36 to the dollar to JPY103.21 to the dollar. This month, the yen's volatility increased to nearly 15 points, its highest since August of 2009, and double the 6.97 amount at year start. Currency options have shown signs that the volatility will continue. This would force companies to continue cutting the sizes of its deals or, at the very least, delay them.
While the yen performed worst among the ten most-traded currencies, it has 49% chance of consolidating to 95 yen to the dollar. However, it also has 48% chance of weakening further to 105 yen to the dollar in the next three months according to options pricing based on Bloomberg data.
Analysts have said it may be wise to wait for things to become stable before making any move.
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